IT certificate in Armenia – tax benefits for IT

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Armenia is a top country for IT specialists looking to relocate, thanks to its attractive conditions for IT businesses operating in both Russian and global markets. The country has a law that provides significant tax benefits for IT companies meeting certain conditions, such as zero VAT and profit rates. However, companies must be registered in Armenia and can only apply for an IT certificate if they work within one of six approved IT directions. To obtain an IT certificate, companies must register in Armenia, open a bank account, develop a business plan, and submit an application to the certification commission. Companies must also report on their progress every six months and may lose their IT certificate if they engage in activities outside of the permitted ones. Other countries with favorable conditions for IT businesses include Kyrgyzstan, Kazakhstan, Moldova, and Belarus.

IT certificate in Armenia – tax benefits for IT

Armenia is among the top countries for the relocation of IT specialists. Opening a company in this country preserves the opportunity to work with both Russian and global markets. Armenia has offered particularly attractive conditions to organizations that carry out their activities in the field of information technologies. We understand what benefits are offered to IT companies and how to use them.

What bonuses are provided to IT companies?

In 2014, Armenia adopted the law “On state assistance in the field of information technologies.” According to it, organizations working in the field of IT and meeting certain conditions (see below) are issued an IT certificate. It significantly reduces the company’s costs, as it is provided with significant tax benefits:

  • zero VAT rate (instead of 20%);

  • zero profit rate (instead of 18%);

  • income tax at the rate:

! Only those organizations registered on the territory of Armenia are subject to the law. These can be not only companies established in the form of an LLC, but also individual entrepreneurs (IPs) registered in Armenia.

!! Preferential taxation applies only to foreign income. That is, if your company is going to work not only with the foreign, but also with the local market, getting an IT certificate is meaningless – benefits will not be provided.

Which IT companies can apply for an IT certificate?

In order to issue this document, the company must work within one of the six approved directions:

  1. engage in software development;

  2. implement educational and research programs in the field of IT;

  3. carry out computer systems management activities;

  4. conduct consulting activities in the field of computer technologies;

  5. perform actions related to web portals;

  6. process data, post information on the network and conduct other related activities.

Other requirements for the IT company:

  • founded less than three months ago:

  • the number of employees does not exceed 30 people;

  • has a legal address (the main thing is to have a virtual office, there can be a real one);

  • has active bank accounts (the movement of funds must be visible).

How to get an IT certificate?

  1. Register a company on the territory of Armenia. More details HERE. The process takes several working days. For now, it can only be done face-to-face. Despite the lack of automation of the work of state bodies, the Russians note that all issues are resolved quite quickly, problems do not usually arise at this stage.

  2. Open an account for a legal entity in banks of Armenia. The process lasts up to two weeks. It is necessary to provide: charter, documents confirming business registration, information about the business reputation of the owners, their property, accounts in other countries. Sometimes financial organizations additionally request information about potential counterparties. The director of the company must be present at the bank when submitting documents.

  3. Develop a project business plan. There is no approved form for its registration. The main thing is to reflect: what activities the organization is doing now and what it plans to do in the future.

  4. Apply. The following should be submitted: a free-form application + information about the founders of the company and the number of employees + a business plan. If necessary, you can contact local lawyers. They will help you correctly draw up a package of documents for an additional fee. Then it is sent in paper form to the certification commission under Minek of Armenia.

  5. It is very important to present the project to representatives of the Ministry of Economy. The commission, which makes a decision on issuing an IT certificate, consists of five people. For the speech, it is best to prepare slides and display the key points of the business plan on them.

  6. If a positive decision is made, the IT certificate becomes valid this month (currently it is indefinite).

! Not only the owner of the company, but also its representative can register the company, submit an application and appear before the commission. For this, you need to prepare the appropriate power of attorney and hire a representative. That is, if desired, the owner can solve all issues in a remote format.

!! Someone can be appointed as a director of the company nominally.

I got an IT certificate. What’s next?

It is necessary to inform the tax authorities about this. Also, once every six months, you should report to Minek about the stages of the business plan implementation. The document must be prepared and sent by the twentieth of the month following the reporting half-year. In order not to have your certificate revoked, the main thing is to submit the report on time. No results or low scores cannot lead to its cancellation.

Is there a chance to lose the opportunity to use the IT certificate?

Yes, if the state authorities discover that the company is engaged in not only permitted areas of activity.

Why can they refuse to receive an IT certificate?

There are several reasons. In accordance with current legislation, an IT certificate will be refused if:

  • the company has more than thirty employees;

  • the company’s activity corresponds to one of the six directions indicated above;

  • the application was submitted later than the allowed deadline;

  • the declared company is a “daughter” of another legal entity;

  • the owner or a person who influences the company is a person who has previously violated the requirements of this law;

  • the company had previously been issued a certificate, but the application contained inaccurate information or after receiving the certificate it began to engage in other activities and it was revoked;

  • the rest of the reasons for refusal can be found in the law “On state assistance in the field of information technologies”.

! It should be taken into account that if you have been refused a certificate once, you should find out the reason, make appropriate changes to your project and try to apply again.

Today, Armenia is an excellent option for IT business relocation. A mild climate, the absence of a language barrier, a friendly attitude towards the Russian-speaking population and favorable conditions for conducting business activities. Even if the companies for some reason do not approve the IT certificate, this country is still worth a closer look.

Where can you still get good IT in the nearest foreign country:

Park of High Technologies in Kyrgyzstan

In Kyrgyzstan, there is a special program – Park of High Technologies (HTP), which allows companies with more than 80% of export revenue to reduce taxes or receive zero rates for them. Program participants are exempt from income tax, sales tax and VAT. Taxes on employees’ wages have also been reduced: income tax and social deductions. All residents pay 1% of their winnings to the PVT account.

Astana Hub in Kazakhstan.

In addition to a large number of various seminars, conferences and other options for training “skills”, Astana Hub provides its residents with the opportunity to save on tax payments. Hub members are granted zero rates (0%) on the following taxes:

  • Corporate income tax;

  • Individual income tax;

  • VAT for sale within Kazakhstan, as well as for import according to the approved list.

    Learn more about opening a company in Kazakhstan

Moldova Innovation Technology Park.

Park of innovations and technologies in Moldova. Residents pay a sales tax of 7%, one of the lowest taxes in Europe. Allows you to get a work permit and GNP.

High Tech Park Belarus

Park residents are zero-rated on most types of taxes. Quite a wide list of possible fields of activity, not only IT, but also other high-tech areas of activity, including robotics and mining.

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